THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JAKE TAPPER, CNN: -- across the country. What is the Democratic strategy in the Donald Trump era? I'll moderate. That's Tuesday night, 9 p.m. right here on CNN.

[17:00:06] That's it for "THE LEAD." I'm Jake Tapper. I'll turn you over to Wolf Blitzer in THE SITUATION ROOM. He also is not going to keep his mouth shut.

WOLF BLITZER, CNN ANCHOR: Happening now. You're canceled. Mexico's president calls off a meeting with President Trump after declaring his country won't pay for a border wall. The White House responds by suggesting President Trump could fund the wall by imposing a 20 percent tax on imports from Mexico. Tonight the White House is walking that back.

Pushing an investigation. The president backs off his false claim of widespread voter fraud by calling for an investigation, but is there really anything to investigate?

Stump speech. The president takes a trip on Air Force One to a GOP congressional retreat. He gives a campaign-style pep rally but leaves without taking questions from lawmakers. Are they on the same page?

And the opposition. President Trump's chief strategist, who previously edited a right-wing website, says news organizations have been, quote, "humiliated by the election result." He calls the news media the opposition party and says it should, quote, "keep its mouth shut."

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: Breaking news, tensions exploding over a plan to build a border wall. After saying his country will not pay for a wall, Mexico's president cancels a meeting with President Trump. The White House followed that stunning move by suggesting that attacks on imports from Mexico could pay for the wall. That would hit American consumers in the pocket as they pay higher prices for a vast array of products from Mexico.

The president, meanwhile, picks up where he left off, with his unfounded claim of voter fraud. And he says he'll pick up his pen again. This time he's ordering an investigation, saying he wants to keep the ballot box secure and safe.

But Republican lawmakers are unimpressed by the president's claims. The House Oversight Committee chairman, Jason Chaffetz, an aggressive investigator, says he doesn't see any evidence of voter fraud. We're standing by to see if the president will sign that order tonight.

President Trump, meanwhile, is pushing -- he pushes ahead as he takes his first flight on Air Force One to the congressional Republican retreat in Philadelphia.

As the White House and GOP leaders work to coordinate legislative action, Mr. Trump calls it a chance to achieve great and lasting change. But critics say his actions could sidetrack the agenda.

I'll speak with Democratic Senator Robert Menendez. And our correspondents, analysts and guests, they are standing by with full coverage of the day's top stories.

MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, Wolf, I can tell you some top Republicans are growing increasingly concerned about the president's policies towards Mexico and this recent proposal by the White House to impose a 20 percent tax on Mexican imports in order to pay for the wall.

Tonight, Wolf, the White House trying to walk that suggestion back. And at the heart of that is the -- how to pay for the wall with Mexico, Republican leaders grappling, trying to find out how to do just that.

(BEGIN VIDEOTAPE)

RAJU (voice-over): Tonight, Donald Trump trying to unite Republicans in Congress who have been uneasy about some of the new president's early moves.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Nice to win. Do we agree? It's been a while.

RAJU: After his first trip aboard Air Force One as president, Trump addressing GOP lawmakers at a party retreat in Philadelphia.

TRUMP: This is our chance to achieve great and lasting change for our beloved nation.

RAJU: But his trip overshadowed by his first diplomatic firestorm. The decision by Mexican President Enrique Pena Nieto to cancel a meeting with Trump next week in Washington, amid the country's refusal to pay for a new wall along the border, one of Trump's central campaign promises. TRUMP: The president of Mexico and myself have agreed to cancel our

planned meeting scheduled for next week. Unless Mexico is going to treat the United States fairly, with respect, such a meeting would be fruitless; and I want to go a different route. We have no choice. The American people will not pay for the wall, and I've made that clear to the government of Mexico.

RAJU: And the president blasted NAFTA, the trade deal with Mexico and Canada, that many Republicans on Capitol Hill strongly support.

[17:05:09] TRUMP: NAFTA has been a terrible deal, a total disaster for the United States from its inception, costing us as much as $60 billion a year with Mexico alone in trade deficits.

RAJU: Such tough talk has unnerved some top Republicans.

SEN. JOHN CORNYN (R-TX), MAJORITY WHIP: I don't see any benefit in trying to crawl back into our shell as a country. We can't do that economically. We're obviously next door to Mexico. As I frequently tell my friends in Mexico, I said, "We can't get a divorce. We need to figure out how to make this marriage work."

RAJU: GOP leaders tried to sidestep the feud between Trump and Mexico and revealed the cost U.S. taxpayers may have to shoulder if Trump fails to get Mexico to pay for the wall.

(on camera): Do you think the president should tone it down to salvage this relationship with Mexico?

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: I don't have any advice to give to the president about that issue. We are moving ahead. As the speaker pointed out to our group yesterday, with, what? Roughly yes, 12 to $15 billion.

So we intend to address the wall issue ourselves, and the president can deal with his relations with other countries. On that issue and other issues.

RAJU: Are you concerned about the relationship with Mexico?

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: I think it will be fine.

(END VIDEOTAPE)

RAJU: Now, to pay for that wall, Wolf, Sean Spicer, the White House press secretary, on the way back from Philadelphia, telling reporters that they're looking at the idea of imposing a 20 percent tax on Mexican imports.

And as soon as that suggestion came out, Republicans started to push back, including Lindsey Graham of South Carolina, John McCain of Arizona, John Cornyn, who we recorded there in this piece, raising deep concerns about this idea. And then immediately afterwards, Wolf, the White House starting to walk that back. Sean Spicer saying this is just one thing they're looking at. They have not embraced this idea. It's just illustrative of exactly the proposals they're looking at, at how to pay for this wall.

So not embracing that quite yet. Still an open question, but how exactly to pay for this wall that could cost upwards of $15 billion.

BLITZER: Yes, this crisis in U.S.-Mexican Relations now clearly escalating. Let's see what happens next. Manu Raju in Philadelphia for us.

President Trump is following up his unfounded claim of widespread voter fraud by ordering an investigation. Our justice correspondent, Pamela Brown, has been looking into that.

Pamela, I take it not much congressional enthusiasm for this kind of investigation?

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Not at all. In fact, they're coming out and saying they don't want to investigate this. And, Wolf, the executive order may be signed soon, but how to proceed from here is unclear for officials within the Department of Justice, because there is simply no precedent for this.

(BEGIN VIDEOTAPE)

BROWN (voice-over): President Donald Trump is expected to soon sign an executive order authorizing a voter fraud investigation. The president declaring the investigation is needed to keep the ballot box safe. As he addressed Republican congressional leaders today at a retreat in Philadelphia.

TRUMP: We are going to protect the integrity of the ballot box, and we are going to defend the votes of the American citizens.

BROWN: But some Republican lawmakers tell CNN they believe any investigation would only serve as a distraction, since the claim of widespread voter fraud, which he says cost him the popular vote, is baseless.

REP. ADAM KINZINGER (R), ILLINOIS: I think it's dangerous ground, because it begins to undermine the base of the Constitution, which is the idea of a fair election.

UNIDENTIFIED MALE: We have a lot to do and those issues kind of -- can distract us.

BROWN: But the White House says there's no harm in conducting the probe.

KELLYANNE CONWAY, WHITE HOUSE COUNSELOR: He is the leader of our democracy, and he just wants to make sure that the undergirding hallmarks of our democracy -- one person, one vote -- are protected. Why not have an investigation? What are -- what is everybody afraid of?

BROWN: Voter fraud investigations are normally triggered when the FBI and Department of Justice discover credible evidence to suggest fraud. Not because of an order from the president. UNIDENTIFIED FEMALE: The U.S. Department of Justice is an independent

agency. In order for the Justice Department to do its job and to work and function well, it has to do so independent of direction from the president and must completely stay above politics.

TRUMP: Have a good time, everybody.

BROWN: President Trump continues to cite a 2012 Pew research study which concluded millions of voter registrations across the U.S. are inaccurate and no longer valid. But the study's author, David Becker, has repeatedly told CNN the study found no evidence of widespread voter fraud.

DAVID BECKER, AUTHOR OF PEW RESEARCH STUDY: There's a big leap between an out-of-date record and administrative inefficiency on a list, and the act of voter fraud. The -- it just doesn't happen.

TRUMP: There are millions of votes...

[17:10:02] BROWN: In an interview with ABC News Wednesday, the president said Becker must be groveling.

TRUMP: Take a look at the Pew reports.

DAVID MUIR, ABC NEWS: I called the author of the Pew report last night and he told me that they found no evidence of...

TRUMP: Really, then why did he write the report?

MUIR: He said no evidence of voter fraud.

TRUMP: Excuse me, then why did he write the report? According to Pew report -- then he's -- then he's groveling again.

BROWN: The president insisted he would have easily beaten Hillary Clinton in the popular votes if he wanted to.

TRUMP: I would have won the popular vote if I was campaigning for the popular vote. I would have gone to California, where I didn't go at all. I would have gone to New York, where I didn't campaign at all. I would have gone to a couple of places that I didn't go to. And I would have won that much easier than winning the Electoral College.

BROWN: Hillary Clinton received nearly 3 million more votes than Donald Trump nationally.

(END VIDEOTAPE)

BROWN: And how President Trump's attorney general nominee Jeff Sessions will respond to this is still unclear. He has already been asked about Trump's request for a voter fraud investigation by senators on the Judiciary Committee. It's likely he'll respond before the committee vote on his nomination next Tuesday -- Wolf.

BLITZER: Pamela Brown reporting for us. Thanks very much. Joining us now, Democratic Senator Robert Menendez of New Jersey.

He's a key member of the Senate Foreign Relations Committee. Senator, thanks for joining us.

SEN. ROBERT MENENDEZ (D), NEW JERSEY: Good to be with you, Wolf.

BLITZER: What's your reaction to the cancellation of this planned meeting next Tuesday between President Trump and President Pena Nieto of Mexico? The Mexican president announced he wasn't coming?

MENENDEZ: Well, it's a major, major issue. First of all, there's no way that President Pena Nieto could possibly come to the United States, with the announcement of President Trump that Mexico is going to pay for the wall.

Secondly, Mexico is our second largest export market in the world as of the end of 2015, the last year we have records for. We sent about $267 billion of U.S. goods and services to Mexico. So, we have actually an export surplus when it comes to services that we provide and get paid for in Mexico. So, it's our front door neighbor, and the reality is we have much intertwined in term of our respected interests and fate.

So, you know, this is a major, major challenge to the U.S.-Mexico relationship, which is important to us in so many different dimensions.

BLITZER: Speaking of that, United States and Mexico have an important security relationship, as you know. The two nations cooperate very closely on drug trafficking, terrorism, for example, are those security agreements in jeopardy right now?

MENENDEZ: Well, I would hope not. I mean, it's in both countries' interests to stop the drug trafficking, human smuggling, the variety of issues we have with gangs in the Western hemisphere, particularly in Central America as they try to get their reach up into the United States. So, it's in both country's interests.

But obviously when you continue to challenge a country, when you say to your neighbor who lives next door, if we were living side by side as neighbors and you say, "There's no fence between us, but by the way I'm going to put one up and you're going to pay for it," that's just impossible to accept for the president of Mexico and the Mexican people are very proud.

So, at the end of the day, this permeates the overall relationship, but I certainly hope the security element of it and the interests we mutually have will be preserved, notwithstanding this challenge that we have between President Trump and President Pena Nieto.

BLITZER: Now, the White House a few hours ago suggested the president wants maybe a 20 percent tax on all imports from Mexico coming to the United States to pay for that wall for the border wall. Since then the White House has now started to walk that back. They got a lot of grief from a lot of Republicans, I should say, as a result of that initial proposal, how to pay for the wall. But do you worry that the U.S. and Mexico right now could be headed toward a trade war?

MENENDEZ: Well, Wolf, as a senior member of the Senate Foreign Relations Committee and the ranking Democrat on the Western Hemisphere subcommittee, and as a member the Senate Finance Committee that deals with all tax and trade questions, yes, I am worried because, you know what?

OK, you're going to slap 20 percent on Mexico. So, they'll slap 20 percent on the $267 billion that the United States sells in goods and services to their country. Those are goods and services made by Americans here. Jobs in the United States. And at the end of the day, if that's what's going to happen, American workers suffer. And at the same time consumers suffer because the imports that come from Mexico, particularly in food product among others, are ultimately going to be far more expensive for the consumer.

And we have world trade organizations obligations. I'm not sure how this sits in the context of our world trade obligations.

So, at the end of the day, you don't want to start disrupting the international order, because others will find the belief that, if you can do it, so can we.

BLITZER: Your Senate colleague, Republican Senator Lindsey Graham, he just tweeted this, and I'll put it up on the screen. Let me read it to you. "Simply put, any policy proposal which drives up costs of Corona, tequila or margaritas is a big-time bad idea. Mucho sad."

Your reaction to Senator Lindsey Graham. He was obviously trying to instill a little humor in that.

MENENDEZ: Yes, and Senator Graham and I get along very well. We see in many parts of the world eye to eye, even though beer we're on separate sides of the aisle. And he is probably, you know, one of the members of the Senate who has the greatest humor in the context of being able to use it in a very powerful way.

The reality is, is that all those things that he talked about and thing that are far -- maybe far more important, like food products, are going to be more costly to U.S. citizens.

And when our products become more expensive if there's a retaliatory tariff by Mexico, that's going to affect jobs here in the United States. That's not how you become the greatest job creator ever known to mankind.

And, so, you know, our challenge is we need to work with Mexico and get our relationship to meet our mutual challenges, to create greater stability, greater economic growth, to control the traffic of people and at the same time protect ourselves against the scourge of gangs and drugs. But you don't do it by putting up a wall.

Last time a wall was built was in Germany, and at the end of the day, it ultimately came down. And, so, I don't believe that this is the way to go. And I don't believe that the taxpayers of the United States should

spend nearly $20 billion -- billion dollars on a wall, the great wall of hate, at the end of the day when that 20 billion could be spent far better in creating educational opportunity, in creating jobs, in a whole host of things that are important to our country.

BLITZER: Paul Ryan, the speaker of the House, he says $14 billion, but I know that figure is moving all the time.

Stand by, Senator. There's a lot more to discuss, including President Trump's decision to launch a formal investigation into what he regards as widespread voter fraud.

(COMMERCIAL BREAK)

[17:41:43] BLITZER: We're talking with Senator Robert Menendez, we'll get back to him shortly. But there's some more breaking news we're following.

President Trump is caught up in a diplomatic feud, whose Mexico whose president has just canceled a White House meeting set for next Tuesday after refusing to pay for a border wall. The White House now suggests a tax on Mexican imports into the United States could pay for the wall even as the president is sidetracked by his false claim that massive voter fraud cost him the popular vote and must be fully investigated.

Let's turn to CNN's Sunlen. Sunday , we're expecting a formal order at some point from the president launching this investigation.

BROWN: That's right, Wolf. And we were expecting Donald Trump to sign that executive order at some point this afternoon, calling for that voter fraud investigation.

But that has been abruptly postponed this afternoon. White House advisors now saying that it will be pushed to be signed by President Trump either Friday or Saturday, but certainly one of these early patterns of the Donald Trump administration is the signing of these executive actions. 12 so far which calls into question the big question is what does this all boil down to?

Is there some substance to what he's signing or is it all symbolism?

TRUMP: From Donald Trump's first day in office it has been a flurry of activity, signing one executive action after another.

SERFATY (VOICE-OVER): From healthcare...

TRUMP: We'll see if we can get that pipeline built.

REINCE PRIEBUS, WHITE HOUSE CHIEF OF STAFF: An executive order minimizing the economic burden of the patient protection and Affordable Care Act.

SERFATY: From health care...

TRUMP: We'll see if we can get that pipeline built. A lot of jobs. SERFATY: ... to reviving the key stone pipeline.

TRUMP: We've been talking about this right from the beginning.

SERFATY: ... to immigration, putting his signature on 11 executive orders and memorandums.

Since taking office, I have taken major contractual steps to restore the rule of law and to return power to everyday Americans. And even though it's only a few days, we've done it in record numbers.

SERFATY: But are they executive orders actions and memorandum all for show or sign of real change? It's a bit of both. Legal experts say actions like these need to have some root in a statute or in the Constitution, but that doesn't mean they won't be challenged.

For now Republican leaders couldn't be more thrilled with some of Mr. Trump's moves.

RYAN: He's restoring the proper balance and, in our opinion, he is undoing a lot of damage that was done by the last president who exceeded his power.

SERFATY: On Obamacare, Trump is setting in motion a takedown of the Affordable Care Act.

TRUMP: On my first day in office I signed an executive order to roll back the burdens of Obamacare and pave the way for real reform, like health savings accounts that empower individuals to choose the customized plan that is truly right for them.

SERFATY: While the order contains a broad mandate for the heads of agencies to minimize the economic burden of Obamacare, it doesn't specify any single action that would be taken. Truly ending Obamacare needs to be done by Congress.

TRUMP: Our legislative work starts with repealing and replacing Obamacare.

SERFATY: And on immigration Trump is directing the Department of Homeland Security to build a wall along the U.S.-Mexico border.

TRUMP: The secretary of homeland security, working with myself and my staff, will begin immediate construction of a border wall.

[17:25:10] SERFATY: Even though his campaign promise of having Mexico pay for the wall seems to be put on hold.

MUIR: Will they pay us back?

TRUMP: Absolutely, 100 percent.

MUIR: So the American taxpayer will pay for the wall at first?

TRUMP: All it is, is we'll be reimbursed at a later date from whatever transaction we make from Mexico. SERFATY: But for now, funding for the wall has to come through

congressional appropriations, which is bound to set up a legislative fight.

RYAN: The point is we are going to finance the Secure Fence Act, which is the construction of the physical barrier on the border.

REP. JIM HIMES (D), CONNECTICUT: Now he's saying, you know, we're going to find $14 billion to build a wall which won't work. I mean, you sort of step back and say, "What in God's name are we doing and what are we talking about?" Our relationship with Mexico is important.

(END VIDEOTAPE)

SERFATY: And nearly every president in the past has used their legal authority to issue these executive orders. And legal experts that we spoke to today, who specialize specifically in executive actions, say that it does look, as of now, that these actions taken by Trump is -- are in his legal right from the ones that he has signed so far. But, Wolf, that doesn't mean that he won't be challenged later on down the line -- Wolf.

We're back with Democratic Senator Robert Menendez of New Jersey. He's a member of the Foreign Relations Committee.

Senator, what's your reaction to the president's call for a major investigation into what he regards as massive voter fraud? As you know, he told members of Congress that maybe 3 to 5 million people voted illegally in the most recent presidential election, and that's why he didn't win the popular vote, because they voted for Hillary Clinton. What's your reaction to a full-scale investigation he is about to order?

MENENDEZ: Well, Wolf, I think this is a Trump trap. To suggest that 5 million illegal votes took place in the last election is absurd. It's outrageous. It's divisive. I think you know it; I know it. And I think that even the Trump people know it.

But what does it do? And while we can't let it not be challenged, we obviously do. By the same token, it takes away the attention of the American people that their insurance is being taken away without the ability to know what's going to replace it. It does tremendous damage in terms of our environment for generations to come, so it takes away attention from that. The freeze, hiring freeze at a time that we need our veterans to get better processing at the V.A., that won't happen.

And then, ultimately, what this really is all about is voter suppression. Because what you do is you make false claims about illegal votes taking place, and then you pass laws that crack down and make it even more difficult to vote to stop the false claims about illicit votes. And, therefore, you go after groups by virtue of making it more difficult, like African-Americans and Hispanics and seniors, which I guess the president doesn't believe ultimately voted for him. And now you have suppression under the guise of greater voter integrity. And that's what I really think this was all about; and it's a very cynical process.

BLITZER: Senator Menendez, we've got to leave it there. Thanks so much for joining us.

MENENDEZ: Thank you.

BLITZER: Coming up, President Trump labels his critics, quote, "fools" for questioning his idea about paying for the cost of liberating Iraq.

(BEGIN VIDEO CLIP)

TRUMP: We should have taken the oil. You wouldn't have ISIS if we took the oil.

MUIR: You've heard the critics who say that would break all international law, taking the oil. I want to get to the...

TRUMP: Do you believe that? Wait a minute. Can you believe that? Who are the critics who have said that? They're fools. I don't call them critics; I call them fools.

(COMMERCIAL BREAK)

[17:33:08] WOLF BLITZER, CNN THE SITUATION ROOM HOST: We're following the breaking news. Mexico's President now cancelling next week's scheduled White House meeting with the new President, because of President Trump's order to build the border wall.

This afternoon the White House Press Secretary, Sean Spicer, seemed to suggest that 20 percent tax on Mexican imports into the United States could pay for the wall, but the White House now is walking back that idea. Let's bring back our political experts; David Axelrod, let me start with you. The U.S.-Mexican relationship right now, is it headed towards a major crisis?

DAVID AXELROD, SENIOR ADVISOR TO THE FORMER PRESIDENT OBAMA: It sure feels like it, Wolf, and predictability so. When you say to another sovereign nation that you're going to build a wall and force them to pay for it, you're creating a crisis. And there is no way that President Pena Nieto could have come here under those circumstances.

He's already in political trouble in his country, in part, because he met with Donald Trump and didn't raise the wall with him earlier. And, so, you knew that this was going to be a provocative act. And then to sort of casually send your press secretary out to suggest that 20 percent tariff, which would start a trade war with one of our largest trading partners; disaster for American businesses, it really doesn't make sense.

So, we're headed for a crisis and I don't know whether it's just a crisis with Mexico or a governmental crisis here, because as I've said before, when a President speaks it sends army's marching, and marches tumbling, or the alternative is that people just begin not to take his word seriously. And that, for our country, would be a really serious problem.

[01:34: 46] BLITZER: Mark Preston, as you know President Trump, he said the cancellation of the visit - the scheduled visit by the Mexican President to the White House on Tuesday was mutual - was a mutual decision. But it appears that President Pena Nieto initiated the decision after President Trump signed that initial executive order declaring that wall was going forward. How embarrassing is all of this, so early in this new administration?

MARK PRESTON, CNN POLITICS EXECUTIVE EDITOR: You know, I think for both Presidents, if it's politically beneficial for both of them not to meet. If the President of Mexico had come here and was told, you are paying for this wall and then sent home with his tail between his legs, that would have been terribly embarrassing as David Axelrod says, he has his own problems back home. But I think that had he come here next week and sat down with Donald Trump and he told Donald Trump, we're not paying for this wall. If he went out to the national media and said, we're not paying for this wall, that would be incredibly embarrassing to somebody like Donald Trump who always has to have the upper hand and certainly on an issue like this. He has really made it his trademark issue.

BLITZER: One of the unusual aspects of this back and forth, Jim Sciutto, between the U.S. and Mexican leaders was that it was unfolding on Twitter. President Trump who has more than 22 million followers on Twitter, he tweeted, "Maybe you shouldn't come if you don't want to pay for the wall", to which he announced President Pena Nieto to his six - more than six million followers on Twitter, I'm not coming, that meeting is canceled, the back and forth on Twitter in diplomacy, that's pretty unusual.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Yes. Twitter diplomacy or Twitter un-diplomacy, right? Because it was a bitter kind of back and forth, and it's interesting, we've done - we've done a lot of talking about is this a proper way for the President of the United States to communicate? Clearly, other leaders are responding to it, communicating using Twitter for their response, or their answer, both unfriendly ones; in this case or contradictory ones. And then you have other nations sort of registering their approval, right? It's because we've seen Russia, Russian official, the Russian ambassador to the U.S., a very active account here - Twitter account here, registering its approval of many of Donald Trump's statements on various things. So, listen, you know, whether it's proper or not, or productive or constructive or not, it's clearly here to stay because Sean Spicer has said, Donald Trump is certainly going to stick with this means of communication.

BLITZER: Brianna, what - you're doing some reporting on this here in Washington. The reaction you're getting from Members of Congress to this, I think it's fair to say it is a crisis in U.S.-Mexican relations right now. What are you hearing?

BRIANNA KEILAR, CNN SENIOR WASHINGTON CORRESPONDENT: They look at what Donald Trump is saying and they drastically pivot. You'll recognize that what Donald Trump is saying is not what Republicans are saying, even though they're meeting with him today in Philadelphia. So, what they'll say is he talks about building the border wall, you know, they'll - they'll say they are on board of course, with border security. But they'll pivot and they'll say, well this is just one part, this proposed tariff and they will not use the word tariff, is just one part of this comprehensive tax reform plant that we want.

And it's not just Mexico, it's part of taxing people or - sorry, countries who are importing to the U.S. and who we have trade deficits with. That's where we are going to get this money and its really part of a bigger piece, so they're trying to make it so you don't just focus on what Donald Trump is saying. And the other slight luxury they have right now, is this isn't something they are really going to be getting down to dealing with for months now, after April, going into the summer. So, that's when I think we're really going to see a much bigger fight and it might be hard to avoid more public spectacle of disagreement.

[17:38:19] BLITZER: All right. Everybody stand by. There is more news coming into THE SITUATION ROOM. We'll continue our coverage right after this.

(COMMERCIAL BREAK)

BLITZER: We're back with our political experts. Let me go to David Axelrod first. President in Philadelphia, at that Republican retreat today did not exactly get a very enthusiastic reaction, David, when he called for this major investigation into what he regards as massive voter fraud. Is he right now on a lonely crusade?

AXELROD: It's more like a loony crusade, Wolf, because there is no evidence, there is no evidence to support his claim. Let's just review what happened here. The President lost the popular vote by three million votes. He cannot tolerate that inconvenient truth. And, so, he has now concocted this scenario that somehow this was stolen from him because of irregularities. Republican, Democrats, Secretary of States across the country, and elected officials, and people who oversee and police the election process all agree that just did not happen. He ought to let it go. He's beginning to look really, really foolish.

BLIZTER: Brianna, a lot of Republicans are pretty concerned. This is a distraction that could undermine their own specific legislative priorities because of all the attention that is being focused on this.

KEILAR: That's right. I was talking to one, top Republican aide who said, we have bigger things to deal with. And when you talk to Republicans, they tell you something - Republicans not in Donald Trump's sphere, they tell you something pretty much identical to what David Axelrod is telling you. There is no evidence to support this. And the, I was talking to one as well who said, even if there was some sort of finding or if there was a reason to do it which there isn't, elections are a state issue. We don't federalize elections. So, it's not even really an issue that they think should be dealt with on this level, especially when you hear Donald Trump talking about specifically certain states, right? [17:44:54] BLITZER: You heard Senator Menendez and a lot of other

Democrats suggesting all of this voter fraud allegation is a cover for voter suppression. They're accusing the President of wanting to get a stronger voter I.D. laws, for example, that would make it more difficult for some folks, minorities, older people for example, to be able to vote.

[17:45:17] PRESTON: Right. And I think with the -- with the door being open now, you're going to see those who support these stricter Voter I.D. laws using this as an opportunity to try to spread it. Even more so, throughout the country we now -- we've seen, you know, probably the best organized outside group priority who would say has now said they are going to make this a priority for them. Meaning, they are now raising money from democratic donors to try to fight back against this. And the criticism too, of this investigation is, A, he was not very detailed about it, and B, there was never any talk about saying, "OK, if we're going to investigate the system, let's investigate every bit of the system because, yes, our voter rolls are outdated and they need to be cleaned up." But that doesn't translate how.

BLITZER: How would this investigation look like, Jim, the FBI, the Justice Department, who launches an investigation into massive voter fraud?

SCIUTTO: By its nature, it would have to be political because no one -- the FBI doesn't think there is a case here, the Department of Justice, anybody who has looked into it, you know, the number of researchers don't listen to us, listen to the researchers who actually crunch the numbers, listen to the Republican Secretaries of State. You know, at the state level, who have looked into this, they say now the elections were clean with some minor, you know, very, very isolated cases of voter fraud. So, you know, FBI, Justice Department, they have a standard, right. They have a standard to look into things. Now, could a President Trump influence his chosen Attorney General to take a look at it? Absolutely. But fact is, you know, we know based on the data that they wouldn't find anything. So, how long would they look in it, how many people would they deploy to look in it? It's really a political question.

BLITZER: He was going to announce it today but apparently, that's not being pushed back. Maybe tomorrow or Saturday. We'll see when that announcement takes place. Stand by. Coming up. A new fall out after President Trump blasts critics of his

idea that the U.S. should have kept the oil after it liberated Iraq. The President says those critics are fools.

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[17:51:34] BLITZER: There's more fallout from President Trump's remark that the United States should have kept the oil after liberating Iraq. The President says critics who point out that it's a violation of International Law are, quote, "fools". Let's go to our Senior Diplomatic Correspondent, Michelle Kosinski. Michelle, the President's remarks have caused quite a stir.

MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: Right. And this is one of, of course, several items that have jumped out of President Trump's words this week, saying that, not only should the U.S. have taken Iraq's oil during the war, but that we might have another chance to do that. This is something that he has said before, but now that he's President of the United States, it's sparking reactions from confusion to disbelief.

(BEGIN VIDEOTAPE)

KOSINSKI: President Donald Trump, Commander-in-Chief, is criticizing the U.S. Military for not taking Iraq's oil when it withdrew from the country in 2011 and threatening, he might still do so in the future, which would be considered a war crime.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We should have taken the oil. You wouldn't have ISIS if we took the oil.

DAVID MUIR, ABC WORLD NEWS TONIGHT ANCHOR: You've heard the critics who say that would break all International Law, taking the oil. But I want to get to the word that you said --

TRUMP: Can you believe that? Wait, wait, can you believe that? Who are the critics that say that? Fools.

MUIR: What got my attention, Mr. President, was when you said, "Maybe we'll have another chance."

TRUMP: Well, don't let it get your attention too much, because we'll see what happens. I mean, we're going to see what happens.

KOSINSKI: It's something he said on his first full day in office, at the CIA.

TRUMP: The old expression, "To the victor belong the spoils." Do you remember, I always used to say, "Keep the oil."

KOSINSKI: The new White House Press Secretary attempted to explain President Trump's thinking.

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: We want to make sure that our interests are protected. And so, if we're going in to a country for a cause, I think he wants to make sure that America's getting something out of it for the commitment and the sacrifice that we're making.

KOSINSKI: The remarks have alarmed the Iraqi Government.

HAIDER AL-ABADI, PRIME MINISTER OF IRAQ (through translation): Iraq's oil is definitely, constitutionally, the property of the Iraqis. And anything to the contrary is unacceptable. I do not think there is any official in the world who can claim something that is not his.

KOSINSKI: Stealing Iraq's oil would likely be considered pillaging under International Law, a war crime. CEDRIC LEIGHTON, CNN MILITART ANALYST: We are not the Vikings. We are not Ghengis Khan. We are a modern military force that is not there to plunder for riches.

KOSINSKI: Iraq is the fourth largest oil producer in the world. More than 4 million barrels a day. It has the fifth largest reserves on the planet. To somehow take that country's resource, would also require enormous resources. Including, likely, American lives.

LEIGHTON: You would need to have an occupying force of at least 200,000 soldiers. We would have to go to war in order to get the oil, but putting that aside for a second, logistically, it would be impossible. In essence, you'd have to pump the oil out of the ground, take control of the oil, move it to whatever market you're selling it to.

(END VIDEO CLIP)

KOSINSKI: One expert we talked to said what the President might want to be doing here instead is laying the ground work for U.S. companies to be successful in Iraq in oil exploration. What's also not clear is why President Trump keeps talking about this. Is he trying to get some kind of reaction? Does he not realize that this could violate international law? And if not, why aren't his people telling him that? We did reach out to his press secretary, but we haven't heard a response, Wolf.

BLITZER: Coming up, Mexico's President calls off a meeting with President Trump after declaring his country won't pay for a border wall. The White House responds by hinting, the wall could be funded with a tax on Mexican imports into the United States.

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[17:59:32] BLITZER: Happening now. Breaking news. Border war: as President Trump moves ahead on his plan to build a wall, the Mexican President cancels a visit to the White House. Tonight, tensions with the crucial U.S. ally are escalating and the White House is raising the possibility of a hefty tax on Mexican exports to the United States.

Voter probe: will President Trump put his official stamp on debunked allegations of major voter fraud? A possible executive action ordering an investigation apparently has been postponed. We're going to tell you what we're learning this hour.